Many traders would think that because of its stagnant price, gold is in a rangebound market going sideways.<\/p>\n
Sometimes, that’s the case.<\/p>\n
Other times, however, you’re dealing with a trending market that has simply taken a bit of a breather.<\/p>\n
Coming Up With a Plan<\/h2>\n
The strategies used to trade a sideways market versus a trending one are completely different.<\/p>\n
Therefore, it’s important to understand what you’re thinking of trading.<\/p>\n
In my opinion, the best way of accomplishing this is by examining a price chart.<\/p>\n
Let’s start off with this price chart of gold chart below…<\/p>\n
![\"Chart\"](\"https:\/\/cdn.jeffclarktrader.com\/JMU\/images\/202111\/20211110-jmu-01_ews545.png\")
<\/div>\nThere are three key features to this price chart:<\/p>\n
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Gold’s rebound up to $1,919 after bottoming in March 2021.<\/p>\n<\/li>\n
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The inverse head and shoulders pattern with the two shoulders and the head labeled.<\/p>\n<\/li>\n
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The three key levels where gold peaked, which can be used as upside targets (red dotted lines).<\/p>\n<\/li>\n<\/ol>\n
We’re using a bar chart today because it accurately represents the head and shoulders pattern.<\/p>\n
I believe the strong rebound up to $1,919 from the lows this past March was the first wave of a new bullish<\/a> trend in gold. And we can expect it to move higher going forward…<\/p>\n
You might look at its recent action and argue otherwise. That’s why it’s important to note that markets rarely move in a straight line in either direction (up or down).<\/p>\n
It’s far more common that a series of price peaks and valleys move together either higher or lower.<\/p>\n
For example, just look at the decline in gold after peaking at $2,089 in August 2020…<\/p>\n
![\"Chart\"](\"https:\/\/cdn.jeffclarktrader.com\/JMU\/images\/202111\/20211110-jmu-02_ews545.png\")
<\/div>\nNotice how prices would sell off for a few days and bounce… then they would sell off again, before bouncing once more.<\/p>\n
Eventually, gold managed to work its way down to $1,673 by March 8, 2021.<\/p>\n
So, if I’m right, and gold’s in a new bullish trend, then the decline from the $1,919 peak (lower red dotted line) should ultimately prove to be a counter-trend correction.<\/p>\n
In other words, gold’s price is just experiencing some short-term weakness before getting ready to move higher.<\/p>\n
That also means that the March low of $1,673 must remain intact if gold is going to move higher.<\/p>\n
Keep in mind, that doesn’t mean you should rush out and buy gold immediately…<\/p>\n